Newcastle council's investments and interest are down 78 per cent on where they were predicted to be at this point in the year.
A monthly report to Tuesday's council meeting shows interest and investment revenue to the end of May was $1.25 million against a budgeted amount of $5.65 million. The result is down from $2.94 million at the end of January.
City of Newcastle CEO Jeremy Bath said the hit was to capital growth investments, which made up 12 per cent of council's exposure rate. The money is invested into the NSW government's investment agency TCorp through a "long term growth fund" made up of domestic and international shares.
"Certainly it's been a very volatile period, particularly over the last couple of months in the domestic and international stock market," he said. "That volatility, while it does create a loss on paper, overall there is no loss that's crystallised on the basis that we have no intention of cashing out in the short to medium term."
Mr Bath said the reduced return wouldn't impact expenditure and expected the investment to bounce back as interest rates continue to rise. The investment lasts 10 years and the result comes after a return of 5.22 per cent in the past three years.
Council's bottom line has been aided by the sale of the Fred Ash Building and the Bennett Building, which were expected next financial year but brought forward.
Proceeds from the sale of assets were forecast to be $954,000 at this point of the financial year, but the sale of the two buildings boosted this to $10.33 million.
However expenditure was down 27 per cent. Council's total capital spend at the end of May was $38.3 million compared to the year-to-date budget of $52.4 million.
Mr Bath said this was mostly due to COVID-19 staff isolation impacts and ongoing rainfall. He said conversations were currently taking place to determine what the impact will be on the upcoming budget, which will also be voted on at Tuesday's meeting. The budget includes a record $132 million capital works program.
"The work that we're going through right now is identifying what percentage of that work can be carried over and added to the existing works program," Mr Bath said. "If it's work that's underway, that has to be done in place of other scheduled work.
"There's some additional work that can be done and that's usually done where there's the opportunity to contract out to the private sector. But the reality is, if there's $10 million of work that has to be carried over into the new financial year, at least a proportion of that will result in some work that was scheduled to be done in the next financial year being delayed by at least a couple of months."
